Financial Freedom

for Gens X & Y’s

Currency Exchange

A great way to save money – don’t ever go overseas with young children, get your overseas relatives to come to your house. The money you will save on airfares and psychologist’s bills to get over the long haul flights with jetlagged infants will run into many thousands.

If you decide to ignore that advice, another great way to save money when travelling overseas is with the money itself. Unless you are going to Christmas Island, the only value your Aussie dollars will have overseas is in entertaining people with the little windows on our polymer notes.

When you go overseas you will need to get yourself some local currency and there are a number of ways of going about this. Probably the most convenient way to get cash is at an ATM at the airport you land at (assuming you arrive at a major destination in a developed country). You will be hit with a fee from your bank as well as probably a currency conversion fee. Expect the same sort of thing if you purchase stuff overseas with a credit or debit card.

Travellers cheques are handy if you happen to purchase something in the handful of locations that still accept them, but they are not free.

Having a few local dollars/pesos/pounds/yen on you before you arrive will involve a visit to your bank or a currency exchange place before you set sail. Doing this at the airport is probably the most expensive way of buying a foreign currency or converting your overseas money back into Aussie dollars on your return.

Prepaid travel money cards are becoming a popular way to access your money overseas as they are relatively inexpensive and can hold multiple currencies like $US, Euros and Sterling. There are a bunch of them around and may be good value depending on whether they have conditions like an expiry date on the money held on the card.

How much money you end up with is dependant on the exchange rate. Even the most economically challenged among us would be able to tell you that the Australian dollar is strong at the moment. One Aussie dollar will buy you around $1.05 in the US. In theory. In reality the exchange rate used by banks, and in particular currency exchange places, is crap. Your $1 here would be lucky to purchase one US dollar, with the five cents difference going to the company exchanging the currency. Five cents doesn’t sound like much but it certainly adds up over the total cost of a holiday.

No matter what the currency you are converting or the strength of the currencies being exchanged, you will never be offered the actual official exchange rate, unless it involves some hefty fees. The only way to get the official rate is by setting up an exchange yourself, if not before you go, at least when you get back. Whack a status update up asking if anyone is about to head off overseas and would like to exchange the currency you have leftover. Offer it at the official exchange rate on the day of your exchange and you will get the absolute best saving possible – for you and the person you swap the money with.

This entry was posted
on Sunday, January 27th, 2013 at 11:35 am and is filed under Saving.
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